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Rambus
The Value of Competition

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By HowlOnMoon
January 11, 2002

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Sometimes we get all caught up in our "favorite" company and spend too much time trash talking our competitors.

I, for one, value AMD as a company. No, I do not own nor have I ever owned stock in the company. Yes, I do own stock in both INTC and RMBS.

Let's be honest. INTC has a record of flubbing things up. From the famous "floating point error", to manufacturing screw-ups, to product launch delays, etc.

But what were you going to do as a consumer and as an investor?? Since INTC really had no competition (save Cyrix may they rest in peace) in the CPU market.

INTC was a monopoly.

But along comes feisty AMD. At first, AMD was fraught with problems of their own from internal management fights, production problems, and quite frankly, an under performing chip. But what a difference a couple of years make. They actually pulled up beside the Gorilla and thumbed their noses at the beast.

INTC never really had competition before. AMD made them sit up and take notice. They re-doubled their efforts in production, spent more on R&D, top management paid more attention to the details. They had to as AMD was stealing market share with a product as good or better than INTC but at a cheaper price tag.

Remember the U.S. Big Three automakers in the 1970's (for those of us old enough)? Most of the cars coming out were of poor design and even worse manufacturing quality. I personally bought a brand new 1974 Mustang Mach I with cash at age 17. They car fell apart in a couple of years. The firewall actually broke on the car. I sued, delays went on, and then there was a factory recall due to defective firewalls. Ford settled. Then I had a Camaro that was somewhat better but still not a quality car.

Then the Japanese carmakers invaded our market. These were quality built cars that were more reliable, cheaper (save for some politically motivated tariffs from the unions), faster, and more powerful.

Remember, that all US cars came with a 12-month warranty? The Japanese stepped up with a 3-year bumper-to-bumper warranty.

US car sales plummeted, organized labor lost many manufacturing jobs, voters screamed at politicians to "do-something".

Well, what happened was the beauty of competition. The big three HAD to improve the quality of their cars or die off as Chrysler surely would have without the government bailout. And they did make substantial improvements.

The US cars became more reliable, more powerful, and the warranties improved.

This benefited the consumer as well as the investor. Profits increased and stock prices rose.

Enough of the rambling ..........

The point is that I welcome AMD as a viable competitor. I don't believe their product is quite as good as the latest INTC processor, but they are certainly help ensure that INTC puts out the best that they can.

It may yet be a while before we see the true benefits of INTC using RMBS. In my non-tech mind, we are just beginning to see the potential performance of RMBS. Once chips get to the 3-4 gig range (surely this year for the 3 gig) we may truly see the need for this revolutionary memory transfer.

My guess is that so will AMD. They will be forced to come on board with RMBS by competitive reasons.

Competition, ya gotta love it!

A joyous New Year to all!

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